Governor Bentley proudly announced that Alabama will give over $70 million dollars to an out-of-state corporation to come to Alabama.
As part of the deal, the state will give the Illinois-based company as much as $40 million in cash payments over a period of time as the company hits employment benchmarks. The document says Navistar can collect $10 million for site work at the one-mile-long facility. . .
Local governments in the northwest Alabama area have also committed almost $20 million in cash incentives for the project, according to the document.
So we will continue to travel the same path to economic instability, brittleness and dependence. Evidence continue to show the dangers of the Governor’s strategy but also show another path toward resilience and security: empowering locally owned businesses. For instance, listen to the history of Buffalo,
By 1986 three-quarters of Buffalo’s regional economy was controlled by absentee-owned firms. This economic shift from local to non-local ownership of commerce generated record profits in the earlier part of the century, but precipitated long-term social and economic losses in the latter because multinational businesses simply were not as dedicated to the area. For instance, one study revealed that between 1965 and 1980, companies headquartered outside of the Buffalo-Niagara region were twice as likely to close as locally-based ones. When these local firms closed, and the influential families that ran them left town, they also abandoned their philanthropic responsibilities to the area. Independent business leaders were also engaged in local political and economic issues but when multinational representatives replaced them, the local political and economic discourse no longer revolved around Buffalo’s best interest. Economically, the city lost its import-substituting businesses. Socially, it lost its community pillars.
Unfortunately Buffalo’s leaders have done little to recognize the importance of, let alone revive, the local sector. The best example of the city’s allegiance to top-down development is Canal Side, a massive waterfront redevelopment plan, which was to be anchored by mega-retailer, Bass Pro. The city and county took the greater part of a decade to plan this single project and earmarked $14 million for it.
But while elected leaders set aside millions for this waterfront strip mall, they gave nearly nothing to entire blocks of existing local retailers. Too often the community bears the burden of any substantive Main Street development. One example is Grant Street, a two-mile long, distressed retail strip populated by dozens of local shops (including grocery, hardware and home supply stores). For decades these shop owners have tightened their belts to continue serving their neighborhood and yet, between 2006 and 2009 received an appalling $21,000 in business grants from the city. Ironically, after nine years of negotiations, Bass Pro (having no real ties to the city) declined Buffalo’s multi-million dollar offer effectively stunting the area’s greatest silver-bullet development.
Doesn’t this sound like Alabama. Imagine what Alabama locally-owned businesses and communities could do with the $70 million being handed to Navistar, the latest “silver-bullet” development. What paltry sum has been invested in locally-owned businesses and historic town squares across Alabama?
Buffalo businesses and citizens though are trying to pursue an alternative path.
Residents and proprietors have embraced Buffalo First’s localism initiative for a host of reasons, the most compelling of which has been economic. According to research firm Civic Economics, when a person patronizes local independent businesses, over three times more of their money is re-spent in the local community than had they made their purchase at a national chain. This is critical to a struggling metro like Buffalo because it helps to root the few dollars generated by the city, in the city. Localism makes sense because it makes cents.
Sometimes the local economic multiplier effect is far greater when businesses commit to maximize local procurement. For example, Buffalo’s largest community-owned natural foods store, the Lexington Cooperative Market, has pledged to source locally whenever possible. Because of this, it boasts that roughly 51 cents of each dollar spent there is re-spent in the local economy. This happens when the Co-op uses the money that shoppers spend to pay local producers, suppliers, farmers, service providers, and the Co-op’s 70 employees.
Even though supporting local businesses provides greater economic velocity and multipliers, the best reason is:
In addition to boosting economic multipliers, businesses like the Co-op perform another key function that national businesses cannot—they create community wealth. Larger employers may boast that they create “jobs” (even if they are low-wage) but local businesses create wealth because someone who lives in the area owns it. Income is measured by one’s hourly wage or salary but wealth is measured by one’s assets, valuable items a person owns (such as a home, business, art or equipment) that can be converted to cash and can be passed on from one generation to the next or from one neighbor to the next. While income helps to pay the bills, assets give people the power to put down roots, to create and to grow. Every local proprietor in Buffalo has this advantage.
Thomas Jefferson wrote to James Madison: “the small landholders are the most precious part of a state.” He might say today, the small, locally-owner business owners are the most precious part of the state. It is this wealth-creation which breeds political and economic independence. Paerhaps